Central Bank Pilot Project Will Replace Paper and Metal, That Is, ‘Cash’ With Digital Real

The Digital Real Is Closer Than You Think to Being Used

Surprisingly, the Digital Real is about to replace paper and metal cash. At the BTG Pactual CEO Conference 2023, held this Tuesday (14), the president of the Central Bank, Roberto Campos Neto, stated that the pilot project will start soon. However, he did not provide further details on dates and the scope of this pilot.

The president is expected to finish his term at the Central Bank at the end of this year, and made it clear that his intention is to leave the position with some of the main goals of the BC Agenda accomplished, such as the integration of Pix with Open Finance and both with the Digital Real. Additionally, he stated that the Digital Real is a priority for the Central Bank and that he will prepare the country for a new era of digital economy with smart contracts.

The Digital Real Will Not Be a Cryptocurrency. Understand Its Functioning

According to Olhar Digital, the Digital Real will not be a cryptocurrency, as we are used to, but rather a central bank digital currency (CBDC). Furthermore, its value will be stable in relation to the current currency, and those without a bank account will be able to store it in a digital wallet, such as Samsung Wallet, Apple Wallet, or Google Wallet.

Campos Neto also mentioned that the Digital Real will be a digital currency issued by the central bank for wholesale, meaning it will not be mined. The public will come into contact with the CBDC via tokenized deposits converted into stable-value cryptocurrencies issued by banks and institutions approved by the Central Bank, “banks will start to have more digitization in their balance sheets,” he states.

The New Currency Is Being Developed on Blockchain

According to the president of the Central Bank, the Digital Real takes inspiration from Ethereum, the second-largest blockchain in the world. Thus, the new currency is also being developed on blockchain and will be a kind of native token of a large ecosystem. For this to happen, banks and financial institutions must be able to tokenize deposits to enable these new functionalities.

During his presentation on TV Cultura, Campos Neto stated that “banks may be granted permission to tokenize deposits to be used in a new intermediation platform, along with a CBDC, with access to programmable money and functionalities of smart contracts.”